Manufacturing activity in the country fell to a 25-month low of 50.3 in November due to muted new business orders and demand, according to the Nikkei India Manufacturing Purchasing Managers’ Index (PMI).
The Manufacturing PMI was at 50.7 in October. A reading above 50 indicates expansion and a score below this level means contraction.
The latest data come a day after the Central Statistics Office released gross domestic product figures for the second quarter that pointed to a revival in industrial activities with manufacturing sector growth at 9.3 per cent in the period.
“The health of India’s manufacturing economy improved for the 25th successive month in November, although to the least extent in this sequence,” said the monthly survey released on Tuesday, just minutes before the RBI’s fifth bi-monthly monetary policy review.
This is the fourth consecutive month when manufacturing output growth in the country declined. The PMI survey revealed slower increases in incoming new business and output. Further, subdued demand growth led firms to keep workforce numbers broadly unchanged. “Sub-sector data indicated that the slowdown in growth reflected a solid drop in intermediate goods production, as output in both the consumer and capital goods categories increased,” said the release.
Adding to pressures, input cost inflation also jumped up – the strongest since May although factory gate or output prices only rose marginally.
However, in some relief to exporters, the survey revealed that new export orders for consumer and intermediate goods manufactured in India improved in November although there was a contraction in capital goods category.
The data also revealed that amongst sub-sectors, consumer goods was the best performing category, while operating conditions at intermediate goods companies deteriorated for the first time since December 2013.